Buy the news? What kind of beyond stupid market buys the news when everyone knows the news?
Anyone who can read or listen knew precisely when the FDA was going to grant full approval for Pfizer's (PFE) vaccine this very morning. The only shock was the name Pfizer chose: Comirnaty, whatever that means. Come here natty dressed person? Who knows.
But one thing is certain: when good news occurs in this market the public rushed to buy that good news, witness the gains Pfizer has had and it's not just because the company paid three times the price for a little oncological gem, Trillium, confirming what I always say in the lightning round: speculate on little drug companies, they can pan out. Six goes to $18 is a pan-out for certain.
Just consider one moment, though, what the market is telling us with this rally off of Pfizer's approval. It says that people are desperate to get into this market even if they have to pay up to do so, something must seem okay to many because the S&P was down 1% last week.
Let's consider, though, the obvious nature and the profits that are being made.
Start with travel and leisure. Tonight we have Lyft (LYFT) on and Lyft is a company that's been directly hit by a judge who struck down a proposition that makes the gig economy truly an on-your-own affair with no benefits, just payments driving. The stock and its doppelganger Uber (UBER) were down 10% around the opening. However, the Pfizer "news," yes news with quotes, turned that around. Why not? Maybe companies will mandate that more people get the vaccine so there will be less COVID which means more travel.
Last week we saw Airbnb's (ABNB) stock get hit as the company was cautious about travel. The company may be circumspect but the buyers are throwing caution to the wind.
Anyone on last week's extraordinary Este Lauder (EL) conference call knows that you have a play on cross border travel as they do so much business at airports. What an insane move on a heavily shorted stock.
I like the go out stocks, or, more particularly I like Chipotle (CMG) , which is now fulfilling that march to $2000 that I predicted about one thousand points ago.
How about the cross border plays now that people feel more emboldened? That to me means Mastercard (MA) and Visa (V) which have been severely beaten up after reporting fantastic quarters. Talk about obvious, but you must remember having a keen eye for the obvious makes you a junior Warren Buffet in this market.
You want the best buy the news story? How about the airlines and cruise ships? The Pfizer approval seems to have ignited them all. Go for Norwegian (NCLH) : it is vaccinating everyone. Airlines: simple, Southwest (LUV) is incredibly beaten up and yet it is the best run with the best routes.
Next up, the cyclicals; I guess under some pretext, they are big winners especially if they are connected to aerospace. I am a huge believer in the stock of Boeing (BA) which makes me like Honeywell (HON) even more. The market tends to agree with that verdict. It's a day, though, for heavy machinery and steel, perhaps because they were clubbed last week and are on the rebound as part of a broader Pfizer rally?
Don't laugh: this morning oil was up about $1.70 bouncing off $60 as we predicted last week. But when the news about Pfizer came out oil quickly doubled its gain and the oil stocks took off and didn't look back. You have to admire the gains put on by the two biggest yielders, Pioneer Drilling (PXD) and Devon (DVN) , even if that yield is variable. Chevron (CVX) works well for those suspicious of a regular and a special dividend based on realized oil prices.
When oil goes up, heavy machinery goes higher. Remember, Caterpillar (CAT) is more levered to oil and gas than anything else these days. It's a particularly easy trade in this particularly easy environment. Again, it's hard to believe but when CAT goes up you see moves in Emerson (EMR) , Parker-Hannifin (PH) and Eaton (ETN) among others as the group tends to trade together no matter what. You can't avoid thinking that the plastics can rally too, as they "count" as cyclicals in this kind of rally.
Steel takes off, Nucor (NUE) rallies back toward where it was and Cleveland-Cliffs (CLF) shucks off sellers and starts a climb anew. What's truly shocking if you want to know how easy this market can be, is that you can buy these stocks even now because we will get an infrastructure bill and when we do these two will be on fire. Aluminum stocks, which means Alcoa (AA) , catch a serious bid. Copper seems back. It might be as ephemeral as it is obvious but the buyers are willing to bet the move is real and that they can resume their former climb.
One more group: FANG and friends is back with a vengeance. Is there more cyclicality to them than we thought? Or do they just represent a better economy? The semis in particular are strong but that could be because the Chinese greenlighted the merger between Analog Devices (ADI) and Maxim (MXIM) , something that some had doubted given the strained relationship between Beijing and Washington. Hope then springs eternal for the Nvidia (NVDA) , Arm deal as well as the AMD (AMD) , Xilinx (XLNX) tie-up.
It's nice to see Amazon (AMZN) back from the grave. How in heck did that become an opening story? It sure wasn't working as a closed economy story. I don't even want to fathom why Alphabet (GOOGL) can rally or Salesforce.com (CRM) other than to say that it's an all-tech lift-off. Again, this group was sluggish in a Delta-close. So with a Pfizer vaccine now perhaps allowing employers to mandate shots, we can get to herd immunity faster, if there is such a thing.
Finally, you want obvious? Walk away from the Pfizer story for a second and consider what's happening in China. For weeks on end President Xi has been talking about common prosperity. We talk about Robinhood (HOOD) , which got some positive analyst comment today moving it up, but if you want to know the real Robinhood its Xi who seems to want stocks lower as stocks are the province of the rich. Yet people cling to these stocks. You are getting still one more chance to sell them as buyers can't resist the names like JD.com (JD) which reported a very good quarter last night. I say take a hard pass as long as Xi's in charge and he's in charge for life.
How can this move be so pronounced? I'd say the buy the dip - and we had a 1% dip last week - attracts buyers who are fed up with waiting. And the hedge funds that must always maintain shorts get their heads handed to them.
Perhaps the ultimate irony? They say the market always confounds most people: the smartest people in the world are dumbfounded by this continuous climb and curse it and the Fed chief they think is behind it all, as if he's some sort of vast puppeteer overshadowing anything else that is positive. Sure the Fed chief does get to have his annual albeit virtual trip to Jackson Hole but I am putting this rally squarely on Comirnaty, that zany named drug from the amazing company that is Pfizer, the potential savior of more than just the market.